THE SITUATION AND TRENDS IN COSTA RICA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001100100051-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 20, 2016
• Document Release Date: August 28, 2006
• Sequence Number: 51
• Publication Date: April 23, 1971
• Content Type: IM

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Secret
Joint Assessment
The Situation and Trends in Costa Rica
91 c.,7%wrok r%
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State Dept. review completed
DIA review(s) completed.
Secret
23 April 1971
No. 16831 71
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WARNING
This document contains information affecting the national
defense of the United State, within the meaning of 'i'itlc
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
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SECRE'a."
23 April 1971
INTELLIGENCE MEMORANDUM
The Situation and Trends in Costa' 'Rica
Introduction
The vague unrest that has permeated the Costa
Rican scene over the past year may have settled in
for the duration of the Figueres government. Pres-
ident Figueres has irmsde several moves to the left
since his inauguration last May for a four-year term.
Although in keeping with his campaign promises, these
actions have led to a continuing cycle of heavy criti-
cism from the opposition and to defensive reaction
on the administration's part. Symptomatic of the
political queasiness was the spate of rumors toward
the end of 1970, and continuing into this year, of
arms landings, impending coups, and other antigovern-
ment activity.
Costa Ricans traditionally have been tolerant
of irresponsible stances and statements from their
major politicians. They have insisted, however, upon
a sane national course. Their confidence in political
institutions, regardless of the headline politicians
of the moment, has been buttressed by a national abil-
ity to ride out political and economic storms. Al-
though political strains abound, caused by a combi-
nation of Jose Figueres' pursuit of unpopular politi-
cal goals and of Costa Rica's entry into an era of
social and political transition, the country remains
better equipped to deal constructively with its prob-
lems than most other nations in Latin America.
Costa Rica's rmique qualities, which have earned the
nation a reputation as an oasis of functioning democ-
racy and social progress in the generally backward
and politically roiled Central American area, remain
operative despite the current political restiveness.
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Background
1. Figueres' administration marks the end of
a political era dominated for the past 25 years by
a few tireless--and by now, to the public, tiresome--
politician's,, The pattern of political competition
since the 1948 revolution has pitted the National
Liberation Party (PLN), founded by Figueres and the
largest party in the country, against the other major
parties, which formally ar informally join forces for
the elections. The most recent election (February
1970) was principally a contest between two ex-presi-
dents, Figueres and Mario Echandi, both star poli-
ticians of this waning era. It also, however, marked
the beginning of transition politics, as embryonic
parties tried their luck at the polls and as the tra-
ditional groups either split or were on the verge of
doing so.
2. Costa Rica's record suggests that the nation
can survive institutionally intact these throes of
partisan realignment that accompany the search for an
independent voice on the national level by a new gen-
eration. Since Costa Rica's first real election in
1889, the country has seen only two interruptions of
constitutional government: a brief military interven-
tion in 1917 and the civil war of 1948, when force was
used to preserve constitutional order rather than to
depart from it. Throughout its entire history, Costa
Rica has suffered less internal political strife than
its neighbors,
3. Important factors in the preservation of
Costa Rica's stability have been the Costa Rican aver-
sion to military institutions and the electorate's
habit of voting for the opposition. With the PLN
and anti-PLN groups alternating in office for the
past five elections, and the consequent near-total
turnover of security personnel, they civil guard and
other police forces have remained responsive and sub-
ordinate to the civil government. There has developed
the acceptance of electoral defeat by political competi-
tors--with the expectation of future legitimate suc-
cess--of a kind that is rare in Latin America,
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4. Costa Rica is not, however, without its prob-
lems. The country has been affected by the pressure
for change that is rampant worldwide, although the
problem so far is less critical than in other countries.
Social problems, less severe than elsewhere in Central
America, are worsening because of continuing inatten-
tion, rising hopes for economic betterment, and rapid
population growth. The people have come to expect, and
most get, a high level of social services from their
relatively well developed public institutions. There
are pockets of neglect, however, where unrest could
become serious--especially in port cities such as
Limon and in rural areas where housing, nutrition,
and medical care are substandard. Successive govern-
ments, even when committed to reform, have been
stymied by the inability to secure legislative approv-
al of their programs. The non-PLN Trejos administra-
tion (1966-70), for example, was made all but inopera-
tive by the intransigent PI.N majority in congress.
And, although Figueres has a nominal legislative ma-
jority, he also frequently has been unable to obtain
sufficient legislative support.
5. Even within the PLN, a left wing and youth
groups have been expressing in increasingly radical
terms their dissatisfaction with the country's social
ills and with the general absence of political action.
Ideological statements are highly controversial, not
only among the general public but even within the
PLN. Similar disaffection prevails within the other
established parties.
6. Organized labor, which had been politically
impotent, assumed unaccustomed belligerence in the
troubled Caribbean port of Limon in 1968, and later
on the Pacific coast as well, undea, the leadership
of Communist labor advisers. Students have' only re-
cently exhibited signs of politicizing, and in April
1970 they gave the capital, San Jose, its first ex-
perience with student rioting.
7. Along with tolerance, conservatism is a strong
trait of Costa Ricans. Large segments of the less
articulate populace, as well as the vocal rightwing
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press, tiiew with suspicion both the growth of radical-
ism among respectable political groups and the open
and active politics adopted by the Communists in the
laF,t elections and continuing under the Figueres
administration., Unless, however, some issue not now
visible comes along to polarize the public--as happened
briefly in 1948--the solution to currently irksome
problems and issues seems most likely to be sought
via the ballot box in February 1974.
Figueres and the Communists
8. During the campaign Figueres made many promises,
but he has made substantial progress toward fulfilling
only two: authorization for Costa Rican Communists,
like other Costa Ricans, to share in a democratic gov-
ernment; and establishment of diplomatic relations with
the Communist world,, The government?s rapport with do-
mestic and international Communists,, which worries many
and perhaps most Costa Ricans, is the cause of some of
the current distress. There are new indications, how-
ever, that the early bright outlook for the Communists
under Figueres is diminishing.
9. Internationally, the lure of attractive trade
deals led Costa Rica to consider adding Communist
countries to its trading partners even under the
Trejos administration, In November 1968, Costa Rica
made its first coffee sale to the USSR, and Figueres
has moved ahead rapidly on trade negotiations begun by
Trejos, Costa Rica now has diplomatic relations with
the USSR, Poland, Hungary, Yugoslavia, Bulgaria, and
Romania,
10. Relations with the Soviets have been the
most significant public issue in foreign policy. Last
year the USSR paid cash in dollars for large amounts
of Costa Rica's surplus coffee. The negotiators al-
most surely tied this purchase to the opening of a
Russian mission in San Jose and to the promise of two-
way trade. The issues of a Soviet presence in Costa
Rica and permanent trade arrangements became matters
of strenuous debate that was sharpened by Figueres'
typically flamboyant disregard of his foreign minister
and his excessive personal involvement,
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11. The idea that a Soviet mission would inevit-
ably become a center of subversion grew from a right-
wing viewpoint to a general concern when the Mexican
Government last month expelled five Soviet d.iplonmats,
all KGB officers, for alleged Soviet involvement with
a guerrilla organization. President Figueres has indi-
cated that he still intends to move ahead with plans to
exchange ambassadors with the USSP, and the Soviets
themselves will almost certainly be willing to set
up shop, even if the environment is less than ideal,
in hopes of influencing events in their favor. Given
the embarrassment over the Mexican affair and the
Soviet desire to establish embassies elsewhere in
Central America, a Soviet mission when established
will probably be on its best behavior and be circum-
spect in assisting subversives in neighboring coun-
tries. Although the Soviets may be a little piqued
over the fallout from the Mexican affair and over the
loss of a $12-million sale this month when their bid
on construction equipment was eliminated as legally
defective, their irritation will be overcome by the
desire for a foot in Central America. The Russians-
are-coming issue therefore will probably not remain
deflated for long.
12. A problem of considerably more substance de-
rives from the rapid advances made by the Costa Rican
Communists over the past two years. After unsuccessful
efforts to participate in the 1970 elections through
a self-established front group, the Communist Party
(PVP) was able to run candidates via the Popular
Socialist Action (:ASO), a defunct but legally regis-
tered party founded by Marcial Aguiluz, an unortho-
dox Marxist and would-be revolutionary. Both Aguiluz
and Manuel Mora, secretary general of the PVP, won
seats in the 57-man legislature. The Communists
were themselves able to win more than 25,000 votes
in a free election. As there was a strong feeling
among the electorate that a real choice was lacking
in the traditional lineup, however, a sizable portion
of this bloc of voters probably represents dissent
rather than real Communist strength.
13. There is much to suggest that during his
bid for a return to the presidency, Figueres made a
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deal with PVP Secretary General Mora and that the PLN
has a working arrangement with the PVP in regions where
labor strife is serious. How many and how serious the
specifics of these arrangements are remain unclear.
Since he assumed power, however, Figueres has improved
the Communists' position. Although the PVP is still
illegal, the open and complacent Costa Rican society
has long allowed the party to operate almost as though
legal, and it has been granted more and more latitude
over the past year.
14. Mora claims that he exerts strong influence
on Figueres and that Minister of Labor Danilo Jimenez
Veiga is a PVP penetration of the government. He also
has maneuvered to have Francisco Gutierrez Mangel,
whom he asserts he "controls," appointed manager of
the autonomous Institute of Lands and Colonization
(ITCO). Jimenez and Figueres have actively and openly
aided Communist labor organizers, who have gained
the loyalty of the workers of almost the entire banana
industry and gave labor its first sign of life as a
potential political force.
15. Mora's commitment to work with Figueres
within the system has generated internal problems for
the PVP. High officials of the party as well as the
rank and file have become increasingly restive about
Mora's tactics, which many of them see as a "sellout"
to Figueres. At the least, most party members feel
discomf:.ted over the role of supporting a bourgeois
government, a tactic they had not used since the mid
1940s. Mora, who probably exaggerates his ability to
control developments, sees his alliance with Figueres
as a shortcut to power. Recognizing the disenchant-
ment, especially among the party youth, however, Mora
has tried to regain their confidence by introducing a
military training program in the party.
16. After a year's operation, the arrangement
between Mora and Figueres snows mixed results, with
some hint that the PVP may have hit a peak and will
now suffer setbacks because of the division and grow-
ing distrust within the party. Some dissidents have
already moved to establish a rival Communist party.
Although this group shows little immediate promise,
its disenchantment with the orthodox party is sympto-
matic of a PVP decline. Also, the activism, and
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especially the labor successes, of the PVP have re-
duced public apathy toward the domestic Communists,
and resistance to further PVP moves seems likely to
increase. Finally, and perhaps most importantly, be-
cause the "special status" accorded the PVP depends so
heavily on the personal relationship between Mora and
Figueres, the PVP role is likely to decline when Fi-
gueres is no longer in office.
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21. It seems likely that Figueres' successor
will be faced with more and even less tractable prob-
lems The security forces as now constituted are ade-
quate in normal times, but they would be hard pressed
to maintain order if a se-ious breakdown in public
order were precipitated by a problem grown into a
crisis. Even President Figueres has accepted the no-
tion that at'least part of the public forces should
have civil-service status, so that a well trained
corps would be available in case of critical need.
Costa Rica's antimilitarist streak, however, is wide,
and every president has found it necessary to back
off from plans to institute an effective professional
security force. The public relies implicitly on the
spontaneous creation of a "minuteman" force or on as-
sistance from the US or OAS if a crisis occurs,
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Economic Annex
22. Costa Rica's economy continued to expand
rapidly in 1970, but some weaknesses appeared. Real
gross domestic product (GDP) r- ew by an estimated
8 percent,, matching the average annual rate from
1963-69. As usual, exports provided the major im-
petus to growth, with international demand for
bananas and coffee propelling earnings to a record
high of $200 million. Imports rose sharply to $310
million, however, largely because of inventory specu-
lation in anticipation of increased import taxes.
The current account deficit was only partially offset
by net capital inflows, resulting in a serious foreign
exchange loss. By the close of 1970, foreign reserves
stood at less than one month's imports.
23. Budget performance showed considerable im-
provement in 1970. The deficit was reduced to about
ten percent of expenditures and was financed by non-
inflationary borrowing through bond sales. But a sharp
increase in the money supply and a rise of some 8 per-
cent in the cost of living were both'c.tusing concern
to the government as the year ended.
24. Economic growth rates during 1971-72 are
likely to fall below recent Costa Rican achievements,
which in the past have exceeded the Latin American
average. Export gains may slow because of some weak-
ening in international coffee prices and the hurricane
damage to banana plantations late in 1970. Implementa-
tion of the San Jose Protocol to protect the balance of
payments probably will reduce imports, and this may have
some adverse impact on overall business activity. More-
over, net foreign investment inflows may slow as uncer-
taii ty over the fate of the Central American Common
Market continues. Although the economy should be stimu-
lated by increased government spending on investment
projects, there is a danger that budget deficits will not
be fully covered by bond sales. Should the government
turn to the Central Bank for deficit financing, infla-
tion would intensify.
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